Aavas Financiers Limited

Financial Services — Mortgage Finance · NSE

₹1,190.00−₹3.80 (−0.32%)

DalalBaazaar Score

80 / 100

🟢 Strong

Verdict

REASONABLE

Risk

Moderate

Driven by negative free cash flow, small-cap size, which brings sharper price swings.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:46 pm

Understanding the Business

Company site ↗

The 60-second version of Aavas Financiers Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Aavas Financiers Limited provides housing finance services to low- and middle-income customers in semi-urban and rural areas in India.

IndustryMortgage Finance

SectorFinancial Services

Employees7,649

Annual revenue₹2,273 Cr

How does it make money?

Turns over ₹2,273 Cr a year. Of every ₹100 of sales, about ₹29 reaches shareholders as profit, with ₹28 left at the operating level before interest, tax and depreciation. Each of its 7,649 employees supports ₹29.7 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹29.7 lakh

Who are its competitors?

The closest listed comparisons in its industry are BAJAJ FINANCE LIMITED, HDFC BANK LTD, ICICI BANK LTD., STATE BANK OF INDIA. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Not assessable from these ratios

For a lender, returns on capital are shaped by leverage and funding cost rather than by pricing power, so the usual financial signature of an advantage does not apply. Judge this one on deposit franchise, cost of funds and asset quality — none of which are in this data.

Peer median ROE16.5%

What is the outlook?

12 analysts covering the stock expect revenue to grow about 18.0% and earnings to grow about 20.0% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+18.0%

Est. earnings growth+20.0%

Analysts12

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +68% while net margin moved -9% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+68%

Margin effect-9%

DalalBaazaar Score

80/ 100

Strong

Weighted across six categories. Every point is explained below.

✓ Beta of 0.56 — historically steadier than the index
✗ Small Cap: thinner liquidity and sharper drawdowns are normal
✓ Profits have been consistent from year to year
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

83/ 100

Excellent

How good the business is, ignoring the share price entirely.

Valuation

69/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

13.8x

3Y Median

27.0x

40 monthly readings · mean 24.8x · range 14.5x–34.2x

Sector Median

17.0x

median of 4 sector peers

🟢Current valuation is approximately 49% below its 3y median of 27.0x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 19% below the peer median of 17.0x.

vs. its own history

Cheap

27.0x median over 40 months · -49%

vs. sector peers

Fair

17.0x median of 4 peers · -19%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

39.4x

PEG

0.92

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Receivables growing faster than sales
Receivables are up 1117% against revenue growth of 68% — customers are taking longer to pay.

Red Flags

1 item require attention · 1 watch

🟡Margins are compressingFinancial
EBITDA margin is down 4.0 points over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 49% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 31.9% to 27.8%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 14% a year✓ 18.8% CAGR
Latest reported year was 16.9%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 26%✓ 27.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Return on equity stays above 11%✓ 13.0%
For a lender this is the cleanest single read on whether the book is being grown profitably.
4Valuation vs its own median of 27.0x✓ 13.8x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

7 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

4 good · 4 neutral · 3 weak

Market Cap

₹9,436 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

13.8x

Cheap

Cheap against the generic band

P/B Ratio

1.87x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹86.16

Profitable

Profitable on a per-share basis

ROE

13.0%

Moderate

Moderate capital efficiency

ROCE

4.7%

Weak

Low return on total capital employed

Debt/Equity

3.11x

High

High leverage

Revenue Growth (YoY)

16.9%

Healthy

Healthy top-line growth

Profit Growth (YoY)

23.3%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹1,419 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

10.4x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

54.5%

Good

Healthy core-business profitability

Net Margin

42.5%

Good

Strong bottom-line conversion

Current Ratio

1.56

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.56

Defensive

Steadier than the market

52W Range Position

18%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

1236.8 / 1291.0

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

35.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,356 Cr	₹1,680 Cr	₹1,988 Cr	₹2,273 Cr	+18.8%
EBITDA	₹432 Cr	₹491 Cr	₹572 Cr	₹632 Cr	+13.6%
EBITDA Margin	31.9%	29.2%	28.8%	27.8%	—
PAT (Net Profit)	₹430 Cr	₹491 Cr	₹574 Cr	₹655 Cr	+15.1%
EPS	₹54.26	₹61.93	₹71.97	₹82.14	+14.8%
ROE	13.1%	13.0%	13.2%	13.0%	—
ROCE	4.7%	4.5%	4.6%	4.7%	—
Total Debt	₹9,887 Cr	₹12,412 Cr	₹13,918 Cr	₹15,686 Cr	+16.6%
Free Cash Flow	-₹1,963 Cr	-₹2,033 Cr	-₹1,690 Cr	-₹1,419 Cr	—

🟢 Revenue has grown at 18.8% a year over 3 years.

🟢 EBITDA has grown at 13.6% a year over 3 years.

🔴 EBITDA Margin has fallen from 31.9% to 27.8% over 3 years (-4.0 pts).

🟢 PAT (Net Profit) has grown at 15.1% a year over 3 years.

🟢 EPS has grown at 14.8% a year over 3 years.

🟡 ROE has held roughly flat at 13.0% over 3 years.

🟡 ROCE has held roughly flat at 4.7% over 3 years.

🔴 Total Debt has grown at 16.6% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹21,213 Cr

Total Liabilities

₹16,162 Cr

Cash & Equivalents

₹229 Cr

Operating Cash Flow

-₹1,386 Cr

Capex

-₹33 Cr

Shareholding (proxy)

Institutional Holding

31.4%

Insider Holding

50.8%

Corporate Actions

Next Earnings

21 Oct 2026

Analyst Consensus

Recommendations

14 Buy · 5 Hold · 2 Sell

Target Price (Mean)

₹1,659.86

+39.5% vs CMP

Target Range

₹1,300 – ₹2,456

Peer Comparison

Company	P/E	ROE
BAJAJ FINANCE LIMITED	30.2x	17.8%
HDFC BANK LTD	15.9x	13.8%
ICICI BANK LTD.	18.1x	16.5%
STATE BANK OF INDIA	10.3x	15.2%

Recent News

4 mixed2 general

Aavas Financiers (AAVAS.NS) Edges Lower to ₹1193.0, Holding Above Key Support - Charm Flow

siam.in, 13 Oct

AAVAS Forecast — Price Target — Prediction for 2027

TradingView, 25 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Aavas Financiers Q2FY27 Results: Earnings call scheduled for Oct 26

scanx.trade, 13 OctResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Aavas Financiers Share Price Falls 3.46% Today

Univest, 14 JulPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Aavas Financiers Raises ₹200 Crore Through NCD Issue; Shares Trade Lower

HDFC Sky, 30 JulFunding

🟡Mixed / dependsNew funding changes the capital structure. Debt raises leverage; an equity raise dilutes existing holders.

Aavas Financiers Q1FY27 slides: 41% disbursement surge, margins expand By Investing.com

Investing.com Nigeria, 21 Jul

Watch Items

This is a financial-sector business: borrowing is its raw material, not leverage in the usual sense. Debt/Equity and ROCE here aren't comparable to a manufacturer's — read them alongside NIM, GNPA and capital adequacy from the company's own disclosures.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Profitability · Valuation

MiddlingRisk

Points for each in the Score ↑

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last.

All 4 tripwires holding · see Key things to watch ↑